Caixa will use a new mortgage model and expect interest rates to drop

BRASILIA – A.The Federal Savings Bank will launch, next Tuesday,changes to mortgage lending policies this canreduction of interest rates for real estate financing in the country. The information was provided on Thursday night by President Jair Bolsonaro live on social media, accompanied by President Kaisha Pedro Guimaraes.

"Caixa will announce something that will change the lives of Brazilians on Tuesday," Guimarães said while Bolsonaro agreed.

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Earlier in the day, Caixa Econômica Federation President Pedro Guimarães had said the bank would soon release official credit lines for real estate indexed to the IPCA, the official index that measures inflation in the country. These lines are within the scope of the Housing Financing System (SFH), which allows the use of FGTS to pay installments and amortize the outstanding balance of property financing.

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The IPCA can thus replace the reference rate (TR), which is at the heart of the country's real estate loan, and is currently zero. Today, those who finance a property through SFH pay a fixed rate of interest limited to 12% plus TR, the rate that adjusts the outstanding balance.

Since TR is zero, housing financing is in practice limited to a flat rate. Since the cumulative inflation in the country today is 3.22% (given in August for 12 months), the rate for borrowers should be lower in the new regime at this time of low inflation.

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The information was provided by Caixa's president to reporters earlier in the evening before the Central Bank and the National Monetary Council (CMN), responsible for discussing the matter and approving such a measure, made any announcement.

Asked why CMN lacked communication, Guimaraes dissatisfied. Last Wednesday, CMN held an extraordinary scheduled meeting by the Ministry of Economy, but issued only one resolution on debt financing for rice producers.

Then, in a note, the Central Bank announced that CMN has allowed indexing of real estate financing up to the SFH price index. According to the Central Bank, "the measure received from the BC # agenda should favor the expansion of affordable real estate financing conditions, increased competition between financial agents and lower interest rates."